Can alimony be deducted on your taxes?

On behalf of Kajko, Weisman & Colasanti, LLP posted in Divorce on Tuesday, March 20, 2018.

If you are someone who has recently undergone a divorce in Massachusetts and are required to pay alimony under a divorce settlement, one of the important questions you may have is whether you can deduct your alimony payments on your taxes. According to Findlaw, the answer is yes. Alimony can be deducted on the payer’s taxes because the other spouse receives the money as income. However, the payments you deduct on your tax form must actually qualify as alimony, as not all payments involved in a divorce actually can be counted as alimony or can be tax deducted.

The IRS states that payment qualifies as alimony if the payment meets certain conditions. These payments must be made under a divorce arrangement, whether it is a divorce decree, a written agreement of separation or a separation decree separate from the divorce decree. If the payment is made under these conditions, there are further requirements to follow. For example, a payment made under a divorce or separation decree must be made to the divorced or separated spouse, or at least for that person.

The IRS also states that alimony payments should be cash payments. These payments can be made in the form of money orders or checks. Additionally, you cannot make a payment that your divorce settlement explicitly identifies as not being alimony. Living arrangements can also be a factor. The two divorced spouses cannot share the same household at the time of the payment if the spouses are under a divorce or separation decree. The two spouses also cannot file a joint tax form at the time the payment is made.

There are also payments that the IRS will not count as alimony. Child support payments are not considered alimony and cannot be tax deducted. You may also choose to pay your ex-spouse voluntarily, outside of the requirements of your divorce agreement. However, such payments do not qualify as alimony. Other disqualifying payments include money spent on the property of the payer, for use or upkeep, or payments made as part of a former spouse’s income of community property. A person also cannot deduct a lump sum or installment payment of a noncash property settlement.

This article is intended to inform the reader about alimony tax deduction and is not to be taken as legal advice.

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